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EIN Application Process to Change May 13

May 1, 2019

Cleveland, OH

There’s no hiding now – in a few weeks, anyone who applies for an Employer Identification Number (EIN), also known as a Federal Tax Identification Number, will no longer be able to use the name of an entity on the EIN application. As of May 13th, the Internal Revenue Service will only accept EIN applications from individuals who have either (1) a social security number, or (2) a taxpayer identification number.This change applies to online applications as well as those submitted by paper form.

Previously, the IRS permitted entities to use their own EINs to obtain additional EINs for related companies. An EIN is a nine-digit tax identification number that is assigned to sole proprietors, corporations, limited liability companies, estates, trusts, employee retirement plans, and other entities for tax filing and reporting purposes. 

 The Form SS-4 Instructions offer a detailed explanation of exactly who can serve as the “responsible party” listed on the EIN application for various types of entities. Typically, the “responsible person” should be the person who owns or controls the entity, or who has the power to control the entity. In cases where more than one person at a company could be considered the “responsible party,” the entity can decide who should sign. Any subsequent changes to an entity’s responsible party can be submitted to the IRS by completing a separate form that must be filed within 60 days of the change.

The only exemptions to this new “responsible person” rule include governmental entities (federal, state, local, and tribal), the military, including state and national guards, and tax professionals who act as third-party designees on behalf of clients.

According to the IRS, the upcoming change is due to its ongoing security review. This new requirement is intended to provide greater security and bring more transparency to the EIN process.

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